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 August
6, 2006 Commentary (weekend edition)-
Well, I'm
back. It was quite a break, and was definitely a 'working vacation', not a fun,
resting vacation. In due time I will discuss some of the things I did during
this time, as some aspects will add an interesting 'twist' to the mentoring, in an indirect sort of a
way. And I will dole out stories, I am sure, over time, as I alluded to in the
What's New section. Now,
given that I am back, feel free to order any books you held back on while I was
away, as I am in full 'ship mode' at this point, and ready to go.
I'll make one
comment before we get started. So far, I haven't gotten any negative feedback
about selling the books only as
a set now. I didn't think I would, but you can never be too sure how some
people may view a particular change. It's still early, and perhaps with the
'vacation' I just haven't gotten the feedback yet, but so far so good.
Let's get
started on the charts. I'll just update from where we left off, until I get
back on my feet here. I'll start with the last Jim's Chart of the Week. Here's
what I posted before I left.
Here's a monthly chart of the 10-year index,
and the very big, key area it is right at. I chose this chart for my 'vacation'
chart because it will take quite awhile to play out, and would surely be worth
watching the entire time I was gone. As I have said many times, I can't
overemphasize the critical nature of this layout for all markets.
Let's see
what the the index has done since then.
After spending a little time (relative to
this timeframe) in the area, the TNX.X rolled right over, as if on cue. It's
hard to see the detail on this timeframe, so I'll drop down and we can look
more closely at this. Keep in mind, on this timeframe all we have here is a
small initial reaction. The longer-term decision is not even close to having
been made at this point.
Let's look at this on the daily timeframe. Understand we
are dropping down by about a factor of thirty here.
I had to scrunch (now there's a professional
sounding technical term, huh?) this up quite a bit to show most of what I
wanted to show. Three things are readily apparent to me here. First, there is a
pattern here right out of one of my books. Second, there are two tight areas
based on key numbers right at a very key line. This area will tell me a lot,
and was a good candidate for this week's chart of the week (but I chose the
NDX.X instead). Lastly, rates sure did drop off hard right off the area I have
been pointing out for quite awhile now. It's plain to see, in my opinion, that
rates have a crucial decision to make shortly.
Let's follow up on the NASDAQ
Composite index.
The arrow shows the area we have been
watching since way back. When I left off the COMPX had rolled nicely off the
area, and had given me enough to work with already. Go back and look at the
previous commentaries on this and you can see how I have been watching this for
some time now. The COMPX just kept on rolling, and gave a fantastic move, right
off the area. Do an external retracement and look at the key numbers I watch
(these are clearly laid out in the books), and see where it stalled and started
to creep up. Notice the bar formation, too, on the day it put the recent bottom
in. Boy, this is great stuff.
Let's follow up on the NDX.X. Recall how I
was showing some aspects I was watching on one NASDAQ index, and some others on
the other index, trying to get everyone to do the work and put all this
together themselves in order to learn the most, and draw their own
conclusions.
The NDX.X just kept rolling, too, putting in
an awesome move off my area. Notice where it stopped? Just look at that median
line lower parallel. Do some external retracement work here, too. If you do the
bigger picture work it just gets better and better. Look at where the NDX.X
reacted on Friday. That's not to say it will continue to roll over here. We'll
see. But it sure is an area I want to watch. I chose the NDX.X for my chart of
the week this week because of what's shaping up here (recall you go to the
home page and click on Jim's Chart of
the Week in the upper left to see this).
My goal with that was to not
comment at all, just present the chart, but I find a few comments are almost
necessary for some charts. Here they are. I added a big weekly set on the
chart. The offset line, using a technique right out of Kane Trading on: Median Line and
Fibonacci Synergy, is shown on the chart. Recreate this set and go back
a bit more and you'll see how I got that line. I added another set on there
(which clutters it up a bit) comparing this move now to the previous move. The
chart was already crowded enough so I didn't show any retracements, but do the
work and you'll see some things. This is only my framework. Would you agree
this is a critical area? The market will be talking to me very soon.
Let's finish
with the dollar index.
I'll start with a little quote from the last
commentary: "This is a key spot where the dollar may give me clues as to how
serious it is in resuming that downtrend." This was as the index was in the
area of the arrow. Notice what happened right at the area I mentioned, as the
price action was right there? The dollar jumped right off the area, gave a
solid move to the median line area, which also is the level of the previous
correction high, and then it rolled back down. It never ceases to amaze me how
many areas I point out produce substantial reactions, from a trading
perspective.
This is an important concept I am always trying to point out. I am
trying to find areas where I can 'go to work'. I don't expect to get a lot of
huge 'runners'. I am trying to find areas where I can go to work, as
outlined in Kane Trading on: Trade
Management. I need an initial move so I can do things like gets the
stop moved, reduce the theoretical exposure (I say 'theoretical' because a
market shock event is always possible, and it will blow out any stops one has,
believe me), and so on. How I do this is unlike anything I have seen written up
anywhere, and is explained in great detail, along with my reasoning behind why
I do things the way I do, in Trade Management.
I'll leave it
at that for this week, and we'll dig into some very interesting things as I get
back in the saddle. I tend to go in streaks on various topics, and I know that
I haven't been on mini trading (my favorite area, personally) lately. I have
ground that into the turf at times, much to the enjoyment of my mini trading
followers, and to the dismay of my 'regular' futures and stock traders. I have
been off the mini's in here for some time now, so I'll try to mix some more of
that in.
In reality my methodology is completely 'fractal' in nature, as far
as my experience goes, so it doesn't matter what the issue or timeframe is, as
long as it is liquid, and I really ignore all that when I look at a chart. The
methodology applies no matter what the issue or timeframe is, from yearly down
to tick charts, in my opinion. Forget the issue and timeframe and just study
what the concepts are that I am discussing. Until next week, then, get ready
for some serious action, and don't get lulled into the talking head syndrome of
telling you this market is 'dull' or in the doldrums. The setups are out there,
in quantity.
The next commentary will be next weekend's edition, posted by
Sunday evening, August 13, 2006.
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